Expert-Grup

Reforming the National Financial Stability Committee Is Crucial to Preventing Potential Financial Crises (Analysis)

Wednesday, 23 March 20167194 views
Reforming the National Financial Stability Committee Is Crucial to Preventing Potential Financial Crises (Analysis)

Automatically translated summary. The full article is available in Romanian.

Experts from the German Economic Team and Expert-Grup have analysed the National Financial Stability Committee in Chișinău, the body tasked with coordinating the institutions responsible for financial sector stability. They conclude that serious governance problems, driven by strong political affiliation and an unclear mandate, have made it part of the problem in the banking crisis, and they propose a reform plan.

According to the study, almost half of the Committee's members are politically affiliated. In practice it has acted more as a law-enforcement body than as a communication platform, threatening the independence of the National Bank of Moldova. Its mandate is unclear and overlaps with members' responsibilities, and it focuses on crisis management rather than prevention. A parliamentary inquiry commission also found that the National Bank and the National Financial Market Commission coordinated poorly, communicating informally outside the Committee.

The authors recommend fewer members, low political exposure and strict relevance to financial stability: the heads of the National Bank, the National Financial Market Commission, the Ministry of Finance and the Deposit Guarantee Fund. The National Bank would provide the secretariat, and the chair would be symbolic, rotating annually. Adrian Lupușor, Executive Director of Expert-Grup, said it should be a platform for communication and coordination, not a decision-making body. On 28 March 2016 the Government announced that the Committee will be reformed.

View the original article in Romanian